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Business Advisory

Your company is expanding — and that’s great! You’ve grown from one office to two, three, or even more. But you need to be able to manage all of them to continue to grow. Click through for some help in multi-office management.

Each new office seems deserving of all your time, but there are still your existing offices, whose need for attention hasn’t diminished. Building, disseminating and maintaining a cohesive business strategy across multiple sites is a challenge, but you need to get it right to continue to be successful.

Step one: Information needs to be shared.

This means that no one is behind on information, and you create a sense of community. Technology makes this happen because it allows immediate, widespread communication. You must ensure that there is one main method of digital communication — inconsistently used initiatives quickly become difficult to manage effectively. Use the one tool that works well and commit to communicating relatively frequently through it. You may want to send a brief weekly email newsletter to all staff. The tricky part is working across time zones, so if possible, send official communications when all offices are open.

Step two: Your leadership team is your greatest asset.

Employing an excellent senior management team to undertake communication on the company’s behalf is as important as digital communications. Have a senior management team member assist in running the firm, coordinating each office to provide local leadership. It’s wise to have a strong chain of command and a team that integrates as much as possible with each other to keep everyone informed about work across the company. Strong departmental management complements the businesswide strategic vision.

Step three: Timing is everything.

It’s essential to maintain a top-level presence across all offices and to be a recognizable face to all employees. If your company is based in one region, try to visit each office every month. If your firm is spread across the country, visit every two or three months. Time your visits within a week of each other and give a little more attention in your weekly email newsletter to any office that hasn’t been visited in a timely manner.

It makes sense to prioritize visits according to the size of the office, while maintaining a high level of inclusion in digital communications to show staff that they are highly valued.

Step four: Integrate wherever possible.

Encourage cross-office collaboration to develop a wider understanding of the business as a whole. It’s healthy to work with a number of different people and conducive to caring about the business beyond each office’s four walls. One means of doing this is to give staff opportunities to shape the company’s image, such as by participating in brand workshops or to be personally involved in company improvements.

Step five: Don’t be afraid to try something new.

Always try new things and commit to change. What suits one business may not suit another. Be prepared to innovate to find what works for you. That’s why building a personal relationship with as many employees as possible works — you’re giving people a chance to mix with others they would never normally work with.

Don’t forget the value of old-fashioned face time among and across teams. By encouraging this, you will contribute to successful integration and a corporate culture across geographies. Local offices need to be held accountable for quality control, scheduling and improving systems, and such efficiencies may work companywide.

All of this can seem like a lot of hard work, but splitting time between offices and building a system of shared information is crucial to the overall success of multi-office businesses. By trying to achieve equilibrium, you create a happy workforce that delivers the best results.

Call us at 512-255-7110 now to discuss how we can formulate an effective strategy for you or your business. You can also request your free consultation online.

To lease . . . or not to lease. That’s an issue business owners often face. If you are weighing the pros and cons of leasing versus buying, here are some things to keep in mind.

Cost

Evaluating costs is more complicated than comparing the price of leasing a piece of equipment versus its purchase price. You will also want to consider these issues:

How soon will the equipment need to be upgraded or replaced? Highly technical or specialized equipment becomes obsolete quickly and may be a good candidate for leasing.

How will you arrange for service and repair? Leasing arrangements often include maintenance on the equipment. If you’re thinking of buying, research the equipment’s repair history as well as the cost and availability of reliable service.

How long will you need the equipment? If your use will be short term, then leasing may be the better option.

Can you save money by buying or leasing equipment? If — and when — cash savings will be realized is an important factor for you to weigh.

Do you have the cash available to purchase the equipment? If you use cash for a down payment, you may have less cash for operating and other business expenses.

How will financing your equipment purchases affect your ability to get credit for other things? If you anticipate having future credit needs, you may want to avoid adding equipment loans to your current debt load.

Taxes

If you own equipment used in a trade or business, you will generally be entitled to a depreciation tax deduction (and/or a first-year write-off under Code Section 179). When you lease equipment, your payments are generally tax deductible, although certain types of leases are treated as conditional sales contracts instead of “true leases.”

If you’re weighing leasing versus buying, give us a call. We can help you look at how the various options will play out.

To learn more about the advantages and disavantages of buying or leasing office equipment, give us a call today. Our trained staff of professionals are always available to answer any questions you may have.

Discover how the business and financial consulting services from Round Rock, TX CPA, Richard A. Crow and Associates can increase revenues and improve performance for your business. Request a consultation online or call us now at 512-255-7110.

The reach of social media goes beyond sharing family photos. Shoppers are reading product reviews online before deciding what to purchase. And disgruntled customers are sharing their displeasure with anyone who will read their rants.

A New Risk

The benefit of social media to small businesses is considerable. It has leveled the playing field in many ways. But it has also introduced new risks. One of the most critical is that bad reviews or negative comments could ruin your business’s reputation — or worse.

A Proactive Approach

How can you protect your business from online attacks? Here are some suggestions:

Join the conversation. If you’ve been visible on social media, you’ll have more credibility if something erupts. But that’s not the only reason to have a social media presence. Even if your business is never involved in an online dustup, social media offers an opportunity to market and promote your business and engage with your customers. Smartphones and tablets have made it even easier for people to go online.

Pay attention. Monitor the Internet for news about your brand. Routinely check online review sites (if appropriate) and social networking sites for references to your company, and run your company’s name through a search engine.

Be prepared. You can’t draft specific responses ahead of time, but you can identify your vulnerabilities and draft a response strategy. You’ll be well ahead of the game if you do this before a crisis hits rather than during one. You’ll also be able to dial down your emotions and respond more objectively. There’s another upside to identifying your vulnerabilities ahead of time: You have an opportunity to eliminate them.

Respond. Make sure you have the facts straight before you do anything. However, things can escalate rapidly online. So if you’re going to respond, do so quickly and publicly. That said, not every attack warrants a public response. The complaint may not be legitimate or the person complaining may be a troublemaker, in which case responding may be a waste of time.

Half Full

Any time your business is under attack — online or off — try looking at it as an opportunity to change some minds and bolster your reputation.

Ask any small-business owner what he sees as the major challenges to growing his business, and chances are he’ll say: winning more sales. Ask any medium- or large-business owner what her major challenges have been, however, and she’ll probably say: structural growing pains — putting into place the necessary processes and structure to accommodate a higher volume of business. In fact, one of the most common reasons businesses plateau at a certain level is their inability — or unwillingness — to develop the structure needed for growth.

But aligning structural changes with sales growth is not simple. It is often more of an art than a science. The systems, processes, staff, and organization changes needed to grow are ongoing and dictated by myriad factors such as the nature of the business, its capital requirements and, ultimately, customer demands. Nonetheless, certain structural growth concerns — excluding financing and office/production space issues — are shared among all growing companies and fall into three overall areas: organizational structure, policies and procedures, and systems/technology.

Staffing/Organizational Structure

Among the most common growing pains small companies experience are those related to organizational structure. Organizational structure and reporting hierarchy for a 25-person company is quite different than it is for a five-person organization. Typically, an entrepreneur can manage fine until there are about a dozen people in the organization. At this point, the initial structure — where everyone usually reports to the owner — breaks down. In effect, nothing can be done without involving the owner, creating a communications log jam and a barrier to growth. A telltale sign of such a situation is the line of staff outside the boss’s office — waiting patiently for a decision before work can recommence. The best way to overcome or prevent this from happening is simple: Trust your key employees and learn to delegate. A good place to start is to look at where you are spending your time. You can still have final say on any important decisions, but you need not be involved with the time-consuming, day-to-day issues that can prevent you from focusing on larger, more strategic matters. It’s also important to formalize delegated authority with an organizational chart and job descriptions. These will help you better define functional expertise for a given job and for various departments across the organization, and provide the foundation for the growth of future personnel and key management staff.

Lack of functional expertise is another common growing pain of small companies. Too often, businesses fail to recognize that specific expertise is needed as they grow. Typically, small businesses are organized around the manager’s area of expertise, such as marketing, accounting, or production. This specialized expertise often prevents the business owner from recognizing problems that may arise in other parts of the business. It’s a good idea to periodically get an outsider’s opinion of where expertise may be lacking. These need not be paid consultants, but are often trusted business acquaintances. Tapping into this same group, you can also form an advisory board to give you periodic feedback on strategic direction.

Policies and Procedures

For most smaller businesses, written policies and procedures are often nonexistent and sometimes cursed. Typically, they are associated with the bureaucracy and inefficiency of big companies and the enemy of customer responsiveness and quick time to market. Not surprisingly, most smaller businesses have few documented operational policies or procedural guidelines. But it is precisely this lack of documentation — and the thought that goes into it — that can put a stranglehold on rapid growth. If your business is growing fast enough to require frequent additions to staff, formalized policies are a must for training purposes. Even if you are expanding at a moderate pace, documented policies will likely be necessary once you reach 20 or more employees.

What warrants a formal policy and what should be documented? This will depend on the nature of your business and average skill level of your employees. In general, however, it’s a good idea to document all HR policies in detail, expense approval authorization levels, inventory control policies, billing and collection procedures, and any operational policies that could materially affect your business if they went amiss. An annual budget and sales projection, updated monthly, are also a necessity if you are ever to obtain outside funding or sell your company. Later on, consider putting together a comprehensive policy manual where employees can get answers to questions when decision makers are unavailable.

As you grow bigger, you will also need to put into place more formalized communications channels for employees and customers. An informed and involved staff is usually a more productive and enthusiastic one; whereas a staff that is left in the dark often feels alienated and unappreciated. Regularly scheduled employee meetings, periodic e-mail updates, and a cascade communications policy are several ways to make sure your internal communications channels facilitate, not constrict, growth.

Is your business suffering from growing pains?

Here are some sure signs that structural changes may be in order.

Sales continue to grow but profits do not.

Everyone is working increasingly long hours.

People spend too much time putting out fires.

There are constant lines outside the boss’s door.

There are no regularly scheduled meetings or employee communications.

The “system” is constantly down.

Aging equipment is not replaced.

Systems/Equipment

Perhaps more obvious than organizational or procedural growing pains are those associated with systems and equipment. Smaller businesses are often the last to upgrade to new technology, usually due to cost. Yet the costs of not upgrading are usually much higher. Low productivity, frequent down time, and incompatibility with newer client systems can cripple a business that’s poised for growth. There’s also the matter of keeping up with your competitors both operationally and across product and service offerings.

The average computer is virtually obsolete in just three years, and most of the widely used software applications come out with new versions every two years, so keeping on top of technological advances must be an ongoing endeavor. Start out by working regular capital upgrade costs into your budget. Consider dedicating a full-time person to information technology (IT), if you don’t already have one, and make sure he or she is current on the latest technological developments in your field. Even though you may not be able to afford all the latest equipment, at least you’ll be on top of technology trends in the industry and know what your competitors are up to — or are capable of.

Discover how the business and financial consulting services from Round Rock, TX CPA, Richard A. Crow and Associates can increase revenues and improve performance for your business. Request a consultation online or call us now at 512-255-7110.

When you started your business, you may have formed a corporation to protect your personal assets from lawsuits against your company. However, you must also operate your business like a corporation — or risk losing the liability protection you expect to have.

No matter how long you’ve been in business, always treat your corporation as a separate legal entity. The corporation’s name should appear on company letterhead, checks, and invoices. Contracts should be made in the corporation’s name, not yours or another individual’s.

Meet and Document

Hold shareholder and director meetings according to a regular schedule and keep official minutes of those meetings. Corporate minutes provide documentation of key financial and legal decisions, such as

Authorization for a substantial loan to or from the corporation

Adoption of a retirement plan or approval to make a contribution to an existing plan (e.g., a profit sharing contribution)

Issuance of stock

Purchase of real property or approval of a long-term lease

By observing the formalities, you can protect yourself and have the records you may need if the IRS, a creditor, or a company insider challenges critical decisions that were made.

Don’t get left behind. Contact us today to discover how we can help you keep your business on the right track. You can contact our Round Rock, TX CPA at 512-255-7110 or browse our website to learn more about our Business Advisory Services or our Business Tax Planning.

Are you a business owner who wants to retire someday? Would you like to see the business continue after your departure with younger family members and/or other key employees in charge? Accomplishing the dual goals of retirement and continuity of the business is possible, but it takes planning.

Because every situation is different, your plan should be tailored to achieve the results you desire. That said, you may be interested in an illustration of how a transition plan could be crafted.

Step 1 — Establish a New Entity

A new business entity is formed sometime before your anticipated retirement date. The new entity — let’s assume it is a limited liability company (LLC) called “Company 2” — is capitalized with contributions from the new owners and a small contribution from you.

Step 2 — Transition Operations

Company 2 operates alongside your old company during a buyout period, with you as the managing member. During that period, your old company finishes its existing work and collects its outstanding accounts receivable.

New work is funneled to Company 2 as it comes in. Company 2 rents equipment from your old company and gradually buys the equipment. Any new equipment that must be acquired during the transition period is purchased by Company 2.

Your old company receives a management fee for your assistance during the transition and is reimbursed for any operating expenses it incurs on Company 2’s behalf. You continue to receive a salary from your old company. At a prearranged time and price, the new owners of Company 2 buy out your interest in Company 2.

Step 3 — Liquidate

At the end of the transition period, your company sells its remaining equipment to Company 2 and liquidates, distributing its equity to you.

Benefits

With this plan, liability for claims that could arise from Company’s operations during the transition period are shifted away from your old company, helping to ensure that its equity will be available to you for retirement. Meanwhile, Company’s new owners are in a position to benefit from any future increase in the new company’s value.

Note that this is just one of several ideas for implementing a business transition; any plan should be customized to your specific situation.

The future of your business is too important to leave to chance. Why not get ahead of the curve by starting to think about a continuity plan well in advance?

For more help with your retirement and business continuation plan, give our Round Rock, TX CPA Firm a call today at 512-255-7110.